The global phenol market is structurally short and will remain so until new capacities start to come on stream in Asia in 2013.
Demand for phenol derivatives is steady in Europe, Asia and the US. Although downstream markets such as bisphenol-A (BPA), caprolactam, adipic acid and resins look set to remain this way, producers and consumers are not expecting to see the same high level of demand as in spring 2011 because of global economic concerns.
A lack of long-term visibility, hand-to-mouth buying activity and tight cost management would also prevent any major upturn in demand this year.
There are concerns about cumene availability. The closure of Sunoco’s 545,000 tonne/year cumene facility in the US could potentially lead to availability problems, not only in the US but on a global basis.
Two major turnarounds in Europe, at CEPSA Quimica and INEOS Phenol, are expected to cause some market tightness, but largely in Europe.
Both producers have struggled to build inventories ahead of their outages because of severe weather conditions across Europe.
A number of other European producers have struggled to produce material, such as Poland’s PKN Orlen and France’s Novapex.
Sharp fluctuations in the cost of benzene, which is heavily linked to phenol price movements, will remain a challenge for the market, particularly further downstream where contracts are freely negotiated.